Last month, the U.S. Department of Health and Human Services’ (HHS) Office of Inspector General (OIG) released its annual Solutions to Reduce Fraud, Waste, and Abuse in HHS Programs: OIG’s Top Recommendations. This publication outlines the OIG’s top 25 unimplemented recommendations that, in OIG’s view, would most positively affect HHS programs in terms of cost savings, program effectiveness and efficiency, and public health and safety. These recommendations stem from OIG audits and evaluations and suggest changes coming to the federal healthcare programs that may impact healthcare facilities in the future. The OIG’s recommendations outline where providers could focus their own compliance program to prepare for any further government scrutiny.

The OIG also identified certain recommendations from HHS’ 2018 report and described the successful progress made by certain HHS operating divisions — i.e., the Food and Drug Administration and the Centers for Medicare & Medicaid Services (CMS) — with respect to HHS’ past recommendations. It is likely that the 2019 recommendations will receive the same push toward implementation.

This year, the OIG directed two-thirds of its top recommendations to CMS. The OIG intended the CMS items to “reduce improper payments, prevent and deter fraud, and foster economical payment policies.” With the trust fund for Medicare Part A (inpatient hospital insurance) projected to be depleted by 2026, policymakers likely will look to these areas to save costs, even if CMS does not implement all of these policies. Similar savings are projected for Part B (medical insurance), Part C (Medicare Advantage), Part D (drug plans) and Medicaid. Several of these recommendations may impact healthcare providers, if implemented.

A full list of the OIG’s 25 recommendations is included at the end of this alert; however, a few key recommendations for CMS are highlighted here:

  1. Revising Three-Night Counts for SNFs. The OIG reports that beneficiaries have varying access to and cost-sharing obligations with respect to skilled nursing facilities (SNFs), depending on whether the beneficiary had hospital outpatient or inpatient post-hospital care. Therefore, the OIG recommends that CMS analyze the potential impacts of counting time spent at a hospital outpatient facility toward the three-night requirement for SNF services so beneficiaries receiving similar hospital care have comparable access to these services.

Additionally, the OIG noted that a review of a sample of SNF claims revealed that many SNFs incorrectly used a combination of inpatient and non-inpatient hospital days to determine whether the three-night requirement was met, leading CMS to improperly pay an estimated $84.2 million between 2013 and 2015. CMS’ Office of the Actuary is conducting an analysis to determine whether, and to what extent, this problem persists. SNFs could see further review of their billing here, particularly as hospitals increasingly use observation beds before admission, which may lead patients to believe they have met coverage requirements.

  1. Surety Bonds for HHAs. The OIG previously recommended that CMS should require surety bonds for home health agencies (HHAs), similar to the surety bonds for durable medical equipment, prosthetic and orthotic suppliers. The OIG estimated that at least $39 million in uncollected overpayments between 2007 and 2011 could have been collected from HHAs had they held surety bonds. Policymakers previously made certain changes specifically with respect to HHAs, including implementing change-of-ownership requirements that are different from other providers’ requirements (i.e., limiting ownership changes within 36 months of a previous change) and capping outlier payments in 2010. The OIG’s focus on HHAs in this report suggests further changes and emphasis for HHA compliance will continue.
  2. Revise the Hospital Wage Index. The OIG recommends that CMS seek legislative authority to comprehensively reform the hospital wage index system, which is used to determine, in part, the amount Medicare pays for hospital inpatient services. The OIG noted that because contractor reviews do not always identify inaccurate wage data and CMS lacks authority to penalize hospitals that submit inaccurate or incomplete wage data, significant vulnerabilities exist in the system. Additionally, the OIG noted that the wage index may not always accurately reflect local labor prices, so Medicare payments to hospitals and other providers may not be appropriately adjusted to reflect the prices. CMS stated that it is considering whether to recommend wage index system reform, including these statutory proposals, in the upcoming president’s budget. Hospitals should monitor any such hospital wage reforms, as such changes would have winners and losers, particularly if changes were used in a manner to reduce overall spending.
  3. Least Costly Alternative Policies for Part B Drugs. The OIG noted in the report that CMS “has not made any legislative proposals” to seek authority to pay for Part B drugs based on a “least costly alternative” approach. Under this approach, utilized by CMS until 2010, reimbursement for Part B drugs was based on the payment rate for the least costly product determined clinically comparable to the applicable Part B drug. Previous OIG reports found that a “least costly alternative” policy would reduce Medicare expenditures by $33.3 million annually for certain prostate cancer drugs.

A broader policy could have larger implications, applying to more drugs than those treating cancer. Many drug treatments have various options with different costs particularly where new medical treatments are being developed. An expansive policy could reduce prices, but effectively mandate certain drug selection to be fully covered and limit the adoption of new drugs entering into the market.

  1. Data Collection From Medicare Advantage and Drug Plan Sponsors. For Medicare Parts C and D, the OIG recommends that CMS collect comprehensive data from plan sponsors, including data on potential fraud and abuse, to improve its oversight of plan sponsors’ efforts to identify and investigate these problems. Although plan sponsors may voluntarily report this data to CMS, they are not currently required to do so. The OIG noted that more than half of Part D plan sponsors did not report such data from 2010 to 2012, and, that as of December 2017, only 60 percent of Part C and D plan sponsors have even requested access to CMS’ electronic system for reporting potential fraud and abuse.

The OIG reported that CMS intends to require plan sponsors to report data on potential fraud and abuse and corrective actions taken and will work with plan sponsors to implement the requirement. Depending on implementation, providers should expect plan sponsors to require new provider reporting, similar to certain fraud and abuse training and reporting created by past Parts C and D changes.

  1. Provider Identifiers in Encounter Data. The OIG recommends that CMS require Medicare Advantage plans to include ordering and referring provider identifiers in encounter data. The OIG noted that tracking the quality of patient care by National Provider Identifiers is an important way to assess whether ordering or referring providers have determined that services were appropriate for patients. Although CMS has not reported any progress on this recommendation, the report notes that CMS would consider implementing it. The execution of this change with respect to encounter data could also be used to revise referral rules for Medicare Advantage patients.
  2. Facilitate Medicaid Enrollment Through Medicare Data. State Medicaid agencies have numerous federal requirements for screening new providers, many comparable to what Medicare collects. State Medicaid agencies believe it would be helpful to compare what providers submit to Medicare to what providers make available to state Medicaid agencies, and the OIG agrees.

CMS claims to have made progress here by sharing information in the Provider Enrollment, Chain and Ownership System and implementing a data exchange system with state Medicaid agencies. The OIG believes more could be done to facilitate a more seamless process so state Medicaid agencies can more easily identify providers it must terminate from the Medicaid program, pursuant to law. Depending on enrollment data-sharing implementation, providers could also see a benefit. Currently, providers often have to search multiple systems to ensure their employees and vendors are not excluded — a centralized Medicaid and Medicare exclusions and sanctions list could reduce administrative hurdles with further centralization.

The OIG’s list included many other recommendations to CMS and other HHS divisions. We include a full list of the OIG’s top 25 unimplemented recommendations below. The foregoing seven recommendations, however, are places where OIG would like CMS to focus its future efforts to reduce fraud, waste and abuse, so providers should be aware of them and prepare for any future changes that may impact the industry.

Please consult one of the authors if you have questions about any of the OIG recommendations or how such policy changes could impact your business.

25 Recommendations from Report:

CMS–Medicare Parts A & B

  1. CMS should analyze the potential impacts of counting time spent as an outpatient toward the 3-night requirement for SNF services so that beneficiaries receiving similar hospital care have similar access to these services.
  2. CMS should implement the statutory mandate requiring surety bonds for HHAs that enroll in Medicare and consider implementing the requirement for other providers.
  3. CMS should continue to ensure that medical device-specific information is included on claim forms and require hospitals to use certain condition codes for reporting device replacement procedures.
  4. CMS should seek statutory authority to establish additional remedies for hospices with poor performance.
  5. CMS should seek legislative authority to comprehensively reform the hospital wage index system.
  6. CMS should reevaluate the inpatient rehabilitation facility (IRF) payment system, which could include seeking legislative authority to make any changes necessary to more closely align IRF payment rates and costs.
  7. CMS should periodically review claims for replacement positive airway pressure device supplies and take remedial action for suppliers that consistently bill improperly.
  8. CMS should consider seeking legislative authority to implement least costly alternative policies for Part B drugs under appropriate circumstances.

CMS—Medicare Parts C & D

  1. CMS should collect comprehensive data from plan sponsors, including data on potential fraud and abuse, to improve its oversight of their efforts to identify and investigate potential fraud and abuse.
  2. CMS should require Medicare Advantage plans to include ordering and referring provider identifiers in their encounter data.
  3. CMS should strengthen oversight of Part D payments for compounded topical drugs to prevent fraud, waste, and abuse while maintaining appropriate access.

CMS—Medicaid

  1. CMS should ensure that national Medicaid data are complete, accurate, and timely.
  2. CMS and the Health Resources and Services Administration should ensure that States can pay correctly for 340B-purchased drugs billed to Medicaid, by requiring claim-level methods to identify 340B drugs and sharing the official 340B ceiling prices.
  3. CMS should require States to either enroll personal care services (PCS) attendants as providers or require PCS attendants to register with their State Medicaid agencies and assign each attendant a unique identifier.
  4. CMS should facilitate State Medicaid agencies' efforts to screen new and existing providers by ensuring the accessibility and quality of Medicare's enrollment data.
  5. CMS should improve managed care organizations' (MCOs') identification and referral of cases of suspected fraud or abuse.
  6. CMS should develop policies and procedures to improve the timeliness of recovering Medicaid overpayments and recover uncollected amounts identified by OIG's audits.
  7. CMS should re-evaluate the effects of the healthcare-related tax safe-harbor threshold and the associated 75/75 requirement to determine whether modifications are needed.

Administration for Children and Families (ACF)

  1. ACF should develop a comprehensive strategy to improve States' compliance with requirements related to treatment planning and medication monitoring for children prescribed psychotropic medication.

FDA

  1. FDA should ensure effective and timely processes related to food facility inspections and food recalls.

Indian Health Service (IHS)

  1. IHS should implement a quality-focused compliance program for IHS hospitals.
  2. IHS should assess the continuity of operations programs for all IHS facilities and ensure that each facility has a tested and viable program to respond to and recover from a range of disasters.

National Institutes of Health (NIH)

  1. NIH should require security training and security plans for principal investigators and entities and verify that they have fulfilled these requirements before granting them access to genomic data.

General Departmental

  1. HHS should address issues of non-compliance with the Improper Payments Information Act, as amended, for various programs deemed susceptible to significant improper payments.
  2. HHS should ensure that all future web application developments incorporate security requirements from an industry recognized web application security standard.